MCOM FALL 2013
Almost 90% of the financial pages are:
MARKETS. Eg. Stock market, crude
oil, cotton, foreign exchange etc .
2.) MONETARY POLICY. E.g.. Interest rates,
Inflation, Central banks, S.B.P,etc.
3.) FISCAL POLICY. E.g.. Budget, Government
spending ,Taxes, Deficit, etc.
4.)INTERNATIONAL TRADE & W.T.O. E.g.
Exports, Imports, Asean.
a.) Currencies. b.) Commodities.
4. INTERNATIONAL TRADE.
- ECONOMIC POLICY
CONSISTS of MONETARY POLICY and
The objective of MACRO - ECONOMIC policy is to
have sustainable GDP GROWTH while containing
INFLATION and achieving an acceptable rate of
The fact that GDP rises or falls shows that BUSINESS
CYCLES are unavoidable and MACRO-ECONOMIC
policy can never really conquer them.
GDP GROWTH. Country's annual output and
of good & services. Same as economic growth.
UNEMPLOYMENT. The number of people of
working age without a job as a percentage of
INFLATION. Rising prices across the board.
Monetarists ( Milton Friedman) believed it is a
monetary phenomena. To stabilize prices the
rate of growth of money supply needs to be
GDP can be calculated by adding the total valueof a
countrys annual OUTPUT of goods & services.
GDP. = C + G
purchasing power INFLATION
‗PHILLIPS CURVE‘. There is a trade off
between INFLATION and
The lower the UNEMPLOYMENT RATE
the higher is the INFLATION RATE.
Governments have to choose between the
much GDP growth will cause an
increased rate of inflation called
overheating in the economy. (e.g.
concern in China in 2006 & 2007)
which can lead to a recession and a...